China wants Indian outsourcing crumbs

Sufia Tippu
Friday, 26 May 2006 05:55

IT Industry - Market

When there is a spillover effect of IT outsourcing from India, which is the country most likely to receive business?

Well, no points for guessing. It has to be China and the high level Chinese delegation from Suzhou seems to be making no bone about it. Although Bangalore seems to be the destination for most of the delegations coming from various Chinese provinces, this particular one is targeting the Indian IC design companies in Banglaore and other cities.

About an one hour drive from Shanghai, Suzhou, with its 2500 year old cultural heritage has moved into the hi-tech zone of IC design and traditional IT outsourcing and set to propel  Suzhou Industrial Park , a joint venture between the Chinese and Singapore government,  on the global IT map. The quaint city covered with gardens and steeped in traditions has now overtaken Shanghai in terms of the foreign direct investment (FDI) which today touches $24.8 billion.

Says Daisy Gao, Deputy Director, Suzhou Industrial Park,  “There are 2400 companies in Suzhou – out which US and EU comprise about 50 % while 18% are from Taiwan. 13% from Japan and the rest from other countries and we are looking at attracting more software companies from India.”

While all the large companies like Infosys, Tata Consultancy Services (TCS), Wipro and Satyam have operations in China, it is the medium sized companies that are the likely target for this Chinese city.

Software development and outsourcing, animation and IC design, high end R&D as well as RFID are the areas that the 2400 companies in Suzhou are engaged in, apart from precision mechanicals, bio pharmaceutics and new generation materials.
   
Says Sanjeev Joshi, business development  manager, global accounts Suzsoft Co Ltd, US-based IT services provider, “One thing that I have noticed in the past two years is that the Chinese government is making an all out effort to move up the value chain in terms of IT and software. There is a large domestic market out there which every country is vying for. Now with the government’s active support, China seems to be the one country that seems to be attracting companies who are looking at cutting costs and taking on the local market.”

According to Poornima Shenoy, who heads the Indian Semiconductor Association ( ISA) the opportunities in China are enormous – especially in manufacturing and IC design. “There was a time when we used to talk about China, it was always India versus China –but now the world is realizing that it is not India or China but India and China.”

And, when one talks about IC design and manufacture, it is the intellectual property (IP) protection issue that comes up and the question that invariably props up is whether the government has taken any steps in this direction. “Our government along with the customs department has set up a special organization to protect IP and look into IP violation,” adds Feng Dang from Suzhou Industrial Park Administrative Committee.